Circle of Friends: The Massive Federal Crackdown on Inside Trading - and Why the Markets Always Work Against the Little Guy

In Circle of Friends, award-winning journalist Charles Gasparino chronicles the massive federal crackdown that has already put some of the biggest names on Wall Street behind bars. Circle of Friends is not a defense of insider trading, but it does offer an account of the politics of Wall Street crime fighting, revealing the behind-the-scenes ambitions that motivate headlines and burnish political careers. A riveting work of narrative nonfiction, as engrossing and explosive as fictional thrillers of the finest magnitude.

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Publisher's Summary

The best-selling author of The Sellout tells the explosive story of the government's crackdown on insider-trading networks - an investigation that has already racked up more than 60 convictions.

In Circle of Friends, award-winning journalist Charles Gasparino - one of Wall Street's most knowledgeable observers - follows government investigators and prosecutors as they pursue one of the most aggressive and broad-reaching series of insider-trading cases in the nation's history. A richly textured page-turner of investigative journalism based on extensive reporting, Circle of Friends chronicles the massive federal crackdown that has already put some of the biggest names on Wall Street behind bars, including Raj Rajaratnam, founder of the Galleon Group, and Rajat Gupta, a former CEO of consulting giant McKinsey & Co. Other similarly sized targets are still waiting nervously, including the biggest one of them all - financial impresario Steve Cohen of SAC Capital, the giant hedge fund that has confounded regulators for years by cranking out a steady stream of market-busting returns.

Gasparino goes behind the headlines to reveal how the government makes its case, using every tool at its disposal - and at great expense to taxpayers - to supposedly make the investing world safer for average Americans. Gasparino asks why federal officials are so eager to prosecute these cases: What is the real damage to individuals? Do average investors really care? He explores why insider trading is all the rage these days when the U.S. government has failed to bring a single criminal case against the culprits who caused the 2008 financial crisis.

Circle of Friends is not a defense of insider trading, but it does offer an account of the politics of Wall Street crime fighting, revealing the behind-the-scenes ambitions that motivate headlines and burnish political careers.

A riveting work of narrative nonfiction, as engrossing and explosive as fictional thrillers of the finest magnitude, Circle of Friends is a wakeup call to the investing public.

This is a fine history and update on insider trading (and law enforcement on it) for anyone who hasn't followed the topic in media in a steady, disciplined way. (So, it's good for me.) It gives a very good "fly on the wall" feel for both the traders and firms affected, in their business and personal lives, and the prosecutors and field agents (for SEC as well as FBI/DOJ). This is an evolving area of our emerging "surveillance/analytic society," and the private players are using some sophisticated intelligence gathering themselves, to keep their competitive edge, and skate along the tenuous line between legal and illegal trading. As for the part which detours off to finger-pointing about how some real supposed baddies, at least in the (alleged) public mind, have got away with bad acts while attention was diverted to insider trading, this reappears sporadically across the book. It seems to me hasty. ill-conceived, poorly supported and documented, and seems like perhaps an afterthought to market the book. There is no smoking gun here about the "little guy" getting shafted. Indeed, there is much that seems laudatory about what investigators and prosecutors have done with insider trading, but I appreciate that it is well-hedged by the author with discussion of the fuzziness of the law (and sometimes the career motives of enforcers, and bigger political theater). And, there is human drama, as we see well-heeled traders' lives melt down in quick sequences. This is altogether worthwhile, wide-ranging but accessible and coherent on all facets of this.

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